Who's afraid of the big bad dollar?

Currency is overvalued

For most of the past two years, the dollar had a ferocious run.

Compared to the currencies of its major trading partners, the dollar strengthened by 27% from the start of 2021 through September 2022. For the first time ever, a pound bought less than $1.04 and the dollar's strength extended beyond its traditional peers - it has also hit a record high against the Chinese renminbi, and strengthened even against the currencies of commodity-rich countries like Norway. It is easy to see why. Higher interest rates attract investors, who must first buy the currency to buy high-yielding assets priced in that currency. Over 2022, the gap between interest rates...